Estimate your maximum Home Equity Line of Credit (HELOC) amount.
Understanding Your Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows homeowners to borrow against the equity they have built up in their property. Unlike a standard home equity loan, which provides a lump sum, a HELOC works more like a credit card: you have a limit, you can draw from it as needed, and you only pay interest on the amount you actually use.
How is HELOC Eligibility Calculated?
Lenders typically use a metric called the Combined Loan-to-Value (CLTV) ratio. Most banks will allow you to borrow up to 80% or 85% of your home's total value, including your existing mortgage balance. The formula used in this calculator is:
(Home Value × Max CLTV %) – Current Mortgage Balance = Maximum HELOC Amount
Example Calculation
If your home is worth $500,000 and your lender allows a CLTV of 85%, your total borrowing power is $425,000 ($500k × 0.85). If you still owe $300,000 on your primary mortgage, your maximum HELOC limit would be $125,000 ($425k – $300k).
Draw Period vs. Repayment Period
Draw Period: Usually the first 5 to 10 years. During this time, you can access your funds and often make interest-only payments.
Repayment Period: Usually the following 10 to 20 years. You can no longer draw funds, and you must pay back both principal and interest.
Key Factors Lenders Consider
While equity is the main driver, lenders also look at your Credit Score (typically 680+ for the best rates) and your Debt-to-Income (DTI) ratio to ensure you can afford the potential payments if the variable interest rate rises.
function calculateHELOC() {
var homeValue = parseFloat(document.getElementById('homeValue').value);
var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value);
var cltvLimit = parseFloat(document.getElementById('cltvLimit').value) / 100;
var helocRate = parseFloat(document.getElementById('helocRate').value) / 100;
var resultDiv = document.getElementById('heloc-result');
if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(cltvLimit) || isNaN(helocRate)) {
resultDiv.style.display = "block";
resultDiv.innerHTML = "Please enter valid numbers in all fields.";
return;
}
var totalBorrowingPower = homeValue * cltvLimit;
var maxHELOC = totalBorrowingPower – mortgageBalance;
// Prevent negative results
if (maxHELOC < 0) {
maxHELOC = 0;
}
var monthlyInterestOnly = (maxHELOC * helocRate) / 12;
var formattedHELOC = maxHELOC.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedPower = totalBorrowingPower.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedPayment = monthlyInterestOnly.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var html = "
Your Estimation Results
";
html += "Total Borrowing Power (at " + (cltvLimit * 100).toFixed(0) + "% CLTV): " + formattedPower + "";
html += "Maximum Available HELOC:" + formattedHELOC + "";
if (maxHELOC > 0) {
html += "Est. Monthly Interest-Only Payment: " + formattedPayment + " (if full line is used)";
html += "Note: HELOC rates are usually variable and subject to change based on market conditions.";
} else {
html += "Based on these numbers, you currently do not have enough equity for a HELOC with an 85% CLTV limit.";
}
resultDiv.innerHTML = html;
resultDiv.style.display = "block";
}